OilMin’s gas supply cut cost RGPPL R2,000 crore: CAGhttps://indianexpress.com/article/news-archive/web/oilmins-gas-supply-cut-cost-rgppl-r2-000-crore-cag/

OilMin’s gas supply cut cost RGPPL R2,000 crore: CAG

The ministry,then under S Jaipal Reddy,ordered pro rata cuts in KG-D6 gas supplies to customers following a sharp drop in gas output from the Reliance field.

The CAG has blamed the petroleum ministry for reversing an executive decision and causing a loss of more than Rs 2,000 crore to the state-owned Ratnagiri Gas & Power Private Ltd (RGPPL),the country’s largest gas-based power plant,between April 2011 and October 2012.

The ministry,then under S Jaipal Reddy,ordered pro rata cuts in KG-D6 gas supplies to customers following a sharp drop in gas output from the Reliance field. The March 2011 order directed that cuts be first applied to city gas distribution,followed by power,LPG and fertiliser sector.

“These orders were in contravention to the decision by the empowered group of ministers (EGoM),which had accorded priority to RGPPL on par with fertiliser sector. As a result of this pro rata cut,RGPPL suffered generation loss of 5,679.17 million units valued at Rs 2,028.95 crore including annual fixed charge of Rs 575.26 crore from April 2011 to October 2012,” says the draft CAG report.

The EGoM in October 2008 gave priority to RGPPL on par with fertiliser sector to keep its power tariff affordable and ensure its long-term viability considering the substantial public money invested in the project by public sector undertakings,Maharashtra state and financial institutions.

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RGPPL is promoted by state-run NTPC and GAIL (India) Ltd with 33.41 per cent stake each. Maharashtra State Electricity Board Holding Co has 16.04 percent while the remainder is with financial institutions.

After the April 2011 order,supplies to RGPPL from KG- D6 gradually tapered to 2.18 million standard cubic metres per day by October 2012 as against the EGoM allocated 7.6 mscmd. This brought plant operation down to 32 per cent of its 1,967-MW capacity.

Following the power ministry’s persistence,the petroleum ministry ordered in August 2012 to restore RGPPL priority but kept it in abeyance on the orders of Prime Minister’s Office after Andhra Pradesh complained that its power projects would be severely affected if RGPPL priority was restored. Most of the plants in the state are privately owned.

The matter was supposed to have been placed before the EGoM. The meeting,however has not taken place. The RGPPL plant is on the brink of becoming a non-performing asset due to low supply of domestic gas. It cannot use re-gassified LNG,which would push up tariffs 3-4 times,which the Maharashtra State Electricity Distribution Company is unwilling to pay.

Egom NOD AWAITED

The petroleum ministry under S Jaipal Reddy had ordered pro rata cuts in gas supplies after KG-D6 output saw a sharp drop

As a result,RGPPL suffered a generation loss of 5,679.17 million units valued at R2,028.95 crore

The ministry restored priority to RGPPL,but the decision is awaiting the nod of the EGoM